The UK's millionth uninsured vehicle has been seized by police in the West Midlands today, but AA Insurance warned that fines for uninsured driving are still "too lenient".

The seizure comes on the same day the Motor Insurers' Bureau (MIB) revealed that Bordesley in Birmingham has the highest concentration of uninsured drivers, with eight times the number of motorists driving vehicles without cover compared to the national average.

Of the UK's 34 million drivers, an estimated 1.2 million are uninsured. Data shows 60% of the worst 20 postcodes in the country are in the West Midlands, followed by West Yorkshire with 25%. West Midlands police seized 5,881 uninsured vehicles between January and July 2012 alone – equivalent to 27 a day.

Simon Douglas of AA Insurance said: "A million cars seized is great news, yet there are still an estimated 1.2m vehicles on Britain's roads being driven without cover – that's around 1 out of every 25.

"We are still a long way from cleaning up Britain's roads. In uninsured driver hotspots such as parts of Birmingham, innocent motorists are eight times more likely than average to be hit by an uninsured vehicle."

Since 2005, when police were given powers to stop vehicles identified as being driven without insurance, an average of 500 have been seized nationwide each day. Of those, an estimated 30% are crushed.

Douglas said the penalties levied on uninsured drivers by the courts are too lenient, adding: "It is not a victimless crime."

He said uninsured drivers kill 160 and injure 23,000 innocent people a year, while the cost of the work carried out by the MIB adds about £33 to every car insurance policy – the MIB provides compensation to innocent victims involved in collisions with uninsured drivers and those who fail to stop.

AA Insurance wants the government to impose harsher penalties on uninsured drivers that reflect the premium they would pay were they honest drivers, as well as custodial sentences for repeat offenders.

Research conducted by the MIB (PDF) among communities in the West Midlands and West Yorkshire in July 2012 found that a third of people do not understand the current laws on car insurance.

Ashton West, chief executive at the MIB, said: "Although we have made significant progress in recent years, with the level of uninsured driving having reduced by 30%, we still need to tackle some persistent offenders. That is why we are working with police and community leaders to engage people in these areas and improve their understanding and awareness of the law as well as the consequences."

Ministry of Justice figures show that 94,000 drivers were convicted of driving without insurance in 2011.